CEOs' rosy spin whitewashes weak results
By Ben Berkowitz
NEW YORK (Reuters) - Corporate America has been talking a good game this earnings season, but a closer look shows the results are not nearly as strong as CEO optimism might lead investors to believe.
In fact, a number of companies are coming up short on either earnings or revenue as measured against Wall Street estimates, even as their leaders try to paint a picture of steady returns and solid prospects for 2013. Some investors say earnings expectations have been managed so low they are easy to beat, even if sales come up short.
The 24 hours through Friday morning - the busiest period yet in this earnings season - serve as a good example of the phenomenon.
Between Thursday morning and Friday morning, nearly 40 companies in the S&P 500 reported quarterly results.
Some, like insurer Travelers Cos Inc TRV.N and the railroad operator Union Pacific Corp UNP.N, reported record figures, born mostly of pricing strength in their businesses.
But more companies had quarters like those reported by Internet search heavyweight Google Inc GOOG.O or fast-food chain Chipotle Mexican Grill Inc CMG.N, whose core markets appear to be slowing quickly, much to the consternation of shareholders.
Even though a majority of S&P companies have beat expectations overall this season, 79 percent of the S&P companies that reported results in the last day missed earnings and/or revenue estimates.
It is a further confirmation that USA Inc is facing a challenging environment that does not look likely to turn better anytime soon. Continued...